We see a 40% chance of a recession beginning in 2013, and if that happens, industrial commodities will be hit hard. In the event that the US is able to avoid a recession, we see largely flat performance for most commodities, excluding oil and gold.

Oil
We expect to see oil continue to trade in range, $85-105, unless a geopolitical event constrains supplies. If war n earnest breaks out in Israel or Iran we could see prices as high as double that. If there is relative peace, but a global recession breaks out, oil could fall below $75.

Gold
We expect gold to remain strong as an alternative investment and for the purposes of capital preservation, as it acts as an insurance policy against negative currency events.

We expect the markets to react negatively to the reduction in quantitative easing by the Fed. We feel, in fact, that much of the success and resilience that stocks have shown over the past three years have been due to these programs.

Further, the fiscal cliff deal that will return capital gains rates to pre-Bush levels will have a negative effect on all long-term assets, including stocks.

When we roll our magic dice and shake the magic eight ball, both come up with -3.2% for the S&P 500 for 2013.

The Dow Jones Industrial Average and the S&P 500 both ended at their highest levels since 2008, before the Lehman Brothers collapse.
This was largely a reaction to the Federal Reserve’s decision to buy more than $600 bill of additional debt from the Treasury, commonly called round two of Quantitative Easing (QE2).
Another result was a drop in the dollar: the US Dollar Index dropped below 76 for the first time since last December.

A recent Bloomberg article details Google’s corporate structure, which moves revenues to subsidiaries in low-tax countries such as Ireland, Bermuda, and the Netherlands, with the result of reducing corporate taxes in those countries that are their largest markets: the United States and United Kingdom.

Google’s not alone, of course. Both Facebook and Microsift use similar tax structures, and a US Treasury measure to tax monies moved between international subsidiaries was halted by what we’ve come to know as the “political process”:

Treasury officials, who estimated the policy change would raise $86.5 billion in new revenue over the next decade, dropped it after Congress and Treasury were lobbied by companies, including manufacturing and media conglomerate General Electric Co., health-product maker Johnson & Johnson and coffee giant Starbucks Corp., according to federal disclosures compiled by the non-profit Center for Responsive Politics.